Euro 150 Billion Defense Spree: Europe's Scramble to Unite and Outspend
People are eagerly preparing to transition away from physical currency in Europe
By Lea Verstl · Facebook · Twitter · WhatsApp · E-Mail · Print Copy · Link
Let's get this money flowing! That's the EU's slogan when it comes to their Defense Fund, worth a whopping 150 billion euros. Launched by the commission back in March, the fund aims to finance joint armament projects, but there's a catch - countries must claim the funds for it.
With Trump making it clear that he sees European defense as a cost factor and Putin allegedly planning to attack Eastern Europe, it's crunch time for the 27 national armament industries, entangled in fierce competition for far too long. The key to getting funds? Minimum two member states must be on board for a project to be eligible. For a speedy cash injection, the EU is even making an exception - the first applicant must find a partner, or else the money must be returned.
Political Opinions on European Rearmament
Cooperating? Easier said than done. Green Hannah Neumann, a member of the Defense Committee in the European Parliament, opines that the Security Action for Europe (SAFE) Instrument is nothing more than a makeshift device, granting loans, but not subsidies. To advance the joint defense policy in Brussels with momentum, she advocates for grant-style funding, i.e., Eurobonds, which would involve a joint debt assumption and liability between EU countries.
Billions Languishing in the Corona Fund
Refusing Eurobonds, Germany, the EU's economic powerhouse, has its loans sorted, as it can borrow relatively cheaply without the EU. Hence, Berlin won't be touching this fund, leaving it for other countries to claim for cross-border armament projects that would struggle for funding without the EU. But will the funds be claimed? We'll see.
Speaking of unclaimed funds, consider the Corona Recovery Fund - with as much as €160 billion still available at the start of the year. Popularity for the loans from the four-year-old pot? A measly 13 countries so far.
Rules for Arms Factories: Too Rigid
Given the EU's desire to speed things up, it's pushing to distribute the funds for joint defense projects to countries more rapidly. Experts estimate that European states could save between €24.5 billion and €75.5 billion annually if their armaments industries cooperated.
One of the biggest obstacles to joint defense is red tape. The EU aims to ease it up, streamlining certification, approvals, joint procurement, and transactions through the so-called Omnibus package. The goal? A single market for defense goods. Defense Commissioner Andrius Kubilius is already locked in talks with member states on this matter, acknowledging the need for swift action. He quips, "If regulations continue like this, we may have to ask Putin to delay his attack plans."
Arms* Arms industry* German defense policy* Security policy* White Paper on Security Policy* EU* EU Parliament* EU Commission* Vladimir Putin* Russia* Ukraine* Ukraine conflict* Attack on Ukraine* Budget policy* EU budget
Enrichment Data:
Overall:European countries face challenges in cooperating and accessing EU Defense Fund resources due to several factors, such as:
- Financial concerns: The SAFE initiative is a loan program, which raises concerns among indebted southern EU member states due to its financial implications [5].
- Coordination with non-EU countries: Disagreement regarding whether defense efforts should be coordinated withexternal nations, such as the UK or Turkey, complicates the formation of a consistent approach [2][4].
- Market fragmentation: The European defense market is fragmented, requiring significant coordination and agreement among member states for the European Commission's aims to create a more integrated defense market [5].
- Diverse national priorities: Each EU member state has unique defense priorities and constraints, making it difficult to align interests and resources for joint projects [5].
Despite these challenges, the Defense Fund offers benefits including low-interest loans and simplified procurement procedures, encouraging joint investment in defense capabilities [4][5].
- The EU's slogan for the Defense Fund, worth 150 billion euros, highlights the urgency to secure funds and find partners for joint armament projects, a move aimed at countering perceived threats from Trump and Putin.
- Advocating for a more effective joint defense policy, the European Parliament's Defense Committee member, Hannah Neumann, proposes grant-style funding, such as Eurobonds, to facilitate a cooperative approach in EU security affairs, allowing for joint debt assumption and liability among EU countries.
